2021 (8) TMI 474 - HC - GST

Seeking direction to the respondents to defreeze the bank account - attachment of bank account without issuing notice - Section 83 of the CGST Act, 2017 - HELD THAT - A plain reading of Rule 159(5) of Central Good Services Tax Rules, 2007 clearly shows that after provisional attachment of the property, the applicant ought to have approached the Commissioner. However, in the present case, the petitioners without availing the efficacious alternative remedy, have approached this Court. There are no cause of action has arisen in favour of the petitioners to invoke the inherent jurisdiction of this Court by way of filing the instant petition. Petition dismissed.

Summary

Issues:
Petition for defreezing bank accounts and unblocking input tax credit under CGST Act, 2017 without notice, GST fraud allegations, freezing of accounts under Rule 159(5) CGST Rules, 2007, alternative remedy of approaching Commissioner.

Analysis:
The petitioners filed a writ petition seeking directions to defreeze their bank accounts and unblock input tax credit under Articles 226/227 of the Constitution of India. The petitioners argued that their accounts were provisionally attached under Section 83 of the CGST Act, 2017 without prior notice, leading to financial constraints in paying statutory dues and day-to-day expenses. They contended that they had valid GSTIN numbers, filed regular returns, and had purchased goods against statutory invoices. On the other hand, the respondents presented allegations of GST fraud amounting to ?28.46 crores involving the petitioners. The freezing of accounts was justified based on investigations revealing discrepancies in transactions and operations of the petitioners and their associated firms.

The respondents referred to Rule 159(5) of the Central Goods and Services Tax Rules, 2007, which outlines the procedure for provisional attachment of property. The rule provides for approaching the Commissioner to address objections regarding the attachment within seven days. The court observed that the petitioners failed to exhaust the statutory remedy of approaching the Commissioner before seeking relief through the writ petition. The court emphasized that in the absence of exhausting alternative remedies, the petitioners had no cause of action to invoke the court's inherent jurisdiction. Consequently, the court dismissed the petition, highlighting the importance of following the prescribed procedures and remedies under the law before approaching the court for relief.